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Taxi-Hailing App Pulls Out of New York After 6 Weeks

Six weeks after its debut inside yellow cabs roiled New York’s taxi industry, a cab-hailing app company said Tuesday that it would shut down the service, citing “obstacles and roadblocks” placed before it by the city.

The company, Uber, whose technology helps drivers and would-be passengers find one another, began operating the service last month in more than 100 taxis amid questions about whether the app violated the city’s guidelines, which prohibit prearranged rides in yellow taxis.

Travis Kalanick, the company’s chief executive, said that while passenger demand for the smartphone application was high, business faltered because drivers, fearing reprisal from the city’s Taxi and Limousine Commission, had not signed on in great enough numbers.

“If you don’t have enough cars out there, then you can’t support the people who want to use it,” he said.

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On The Road With Uber

After 23 years, Shadid Mahmood traded in his cab to work for Uber, a start-up company that runs an app to help people hail cars more efficiently.

In a post on Uber’s Web site Tuesday, Mr. Kalanick wrote that the taxi commission had tried to “squash the effort” to provide electronic hailing despite acknowledging privately that the practice is legal under the rules.

A spokesman for the commission, Allan Fromberg, said there was “simply no truth” to Mr. Kalanick’s statement.

Shortly after the app’s introduction last month, the commission issued an industry notice saying it had not authorized the use of any taxi apps for cab-hailing or payment, citing its existing contracts with payment processors. It did not directly address the question of whether Uber’s system violated the ban on prearranged rides.

The commission said Tuesday that rule changes intended to open up the market to app developers would probably be presented at the agency’s public meeting next month.

“Those changes cannot legally take place until our existing exclusive contracts expire in February,” David S. Yassky, the chairman of the commission, said in a statement. “We are committed to making it as easy as possible to get a safe, legal ride in a New York City taxi and are excited to see how emerging technology can improve that process.”

Mr. Kalanick said the company would continue to operate a service that arranges trips in the city’s black cars, though not before landing an apparent jab at the Bloomberg administration, which has trumpeted the city as a nexus of new technologies, in his post on the Uber site. He wrote that the taxi app was available in “more innovation-friendly cities” like Boston and Toronto.

A version of this article appears in print on October 17, 2012, on page A24 of the New York edition with the headline: Its Legality Uncertain, App to Hail Taxis in City Is Halted After 6 Weeks. Order Reprints|Today's Paper|Subscribe